Okay, so this has the scientific due diligence of an art installation rather than an actual proof of utility. But it shows why market-based management is so important.
One project is Michael Marcovici’s Rat Trader. The book describes the training of laboratory rats to trade in foreign exchange and commodity futures markets. Marcovici says the rats “outperformed some of the world’s leading human fund managers.” The rats were trained to press a red or green button to give buy or sell signals, after listening to ticker tape movements represented as sounds. If they called the market right they were fed, if they called it wrong they got a small electric shock. Male and female rats performed equally well. The second generation of rattraders, cross-bred from the best performers in the first generation, appeared to have even better performance, although this is a preliminary result, according to the text. Marcovici’s plan, he writes, is to breed enough of them to set up a hedge fund.
If the above scenario actually works it means a dramatic change in the way we think about the “decision-making” part of the management process.
If the stream of data (think “big data”) can be processed by an arbitrary meat-based neural network – and proven to be effective – what is the point of performance management on the rats?